All You Need To Know Going Into Trade On July 24

Asian shares opened mixed Wednesday as investors weighed signs of progress in U.S.-China trade talks and prospects for the technology industry after the U.S. opened an antitrust probe.

Stocks rose in Japan and Australia, while South Korea’s benchmark slipped, as did U.S. futures. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded little changed at 11,317 as of 7:15 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

BQ Live

Here’s a quick look at all that could influence equities today.

• The dollar touched a two-week high ahead of Thursday’s European Central Bank meeting, where economists widely expect officials to signal their readiness to cut interest rates and potentially broaden stimulus.
• Shares of Amazon, Alphabet and Facebook declined more than 1 percent in post-market trading after the Justice Department opened a broad antitrust review into whether dominant technology firms are unlawfully stifling competition.
• Oil was on track for a fourth day of gains.

Catch all the global markets update here.

Earnings Reactions To Watch

L&T (Q1, YoY)

• High financial, material costs impact earnings.
• Maintains revenue and order growth guidance.
• Order inflow for 2019-20 to be back ended, led by government.
• Weakness seen in margin of most segments.
• Management expects private capex to remain subdued.

Zee Entertainment Enterprises (Q1, YoY)

• Subscription revenue rose 46.7 percent.
• Domestic advertising revenue grew 4.2 percent.
• Ebitda margin expands to 32.9 percent.
• International advertising revenue down 7.6 percent.
• 7.64 crore active users for Zee5 as of June 2019.

HUL (Q1, YoY)

• Revenue of Rs 10,114 crore in-line with consensus expectations.
• Volume growth of 5 percent.
• Ebitda margin expands 150 basis points.
• 10 percent growth in home care business.
• Subdued growth of 4 percent in personal care business.

M&M Financial Services (Q1, YoY)

• Net interest income up 16.5 percent at Rs 1238.3 crore. (Estimate: Rs 1,280 crore)
• Net profit down 74.6 percent at Rs 68.4 crore. (Estimate: Rs 354 crore)
• Consolidated net interest income up 17.1 percent at Rs 14,66.2 crore.
• Consolidated net profit down 66.1 percent at Rs 107.2 crore.
• Impairment on financial instruments at Rs 676.8 crore.
• NNPA at 5.7 percent.
• GNPA at 7.4 percent.

NIIT Technologies (Q1, QoQ)

• Revenue down 1 percent at Rs 962.7 crore.
• Net profit down 17 percent at Rs 87.6 crore.
• EBIT down 30.8 percent at Rs 95.3 crore.
• Margin at 9.9 percent versus 14.2 percent.

Bayer Crop Science (Q1, YoY)

• Revenue down 20.2 percent at Rs 663.6 crore.
• Net profit down 59.7 percent at Rs 59.3 crore.
• Ebitda down 46.1 percent at Rs 123.9 crore.
• Margin at 18.7 percent versus 27.6 percent.

Torrent Pharma (Q1, YoY)

• Revenue up 8 percent at Rs 2,022 crore.
• Net profit up 32.5 percent at Rs 216 crore.
• Ebitda up 13.4 percent at Rs 541 crore.
• Margin at 26.8 percent versus 25.5 percent.

Linde India (Q2 CY19, YoY)

• Revenue down 9.4 percent at Rs 498.2 crore.
• Net profit up four times at Rs 20.2 crore.
• Ebitda up 10.8 percent at Rs 94.5 crore.
• Margin at 19 percent versus 15.5 percent.
• Fuel expenses down 61 percent at Rs 91.7 crore.

Sundaram Clayton (Q1, YoY)

• Revenue up 6.8 percent at Rs 5307.1 crore.
• Net profit down 7.8 percent at Rs 89.3 crore.
• Ebitda up 16.3 percent at Rs 599.5 crore.
• Margin at 11.3 percent versus 10.4 percent.
• Finance cost up 40 percent to Rs 221.5 crore.

SBI Life (Q1, YoY)

• Gross Premium up 41 percent at Rs 6,694 crore.
• Net profit up 5 percent at Rs 372 crore.
• New Business Premium up 52 percent at Rs 3,150 crore.
• Value of new business up 49 percent at Rs 330 crore.
• New business margin widens to 19.9 percent.

GE Power (Q1, YoY)

• Revenue down 3.2 percent at Rs 428.7 crore.
• Net loss at Rs 8.8 crore.
• Ebitda loss at Rs 25 crore.

JK Paper (Q1, YoY)

• Revenue down 10.3 percent at Rs 713.1 crore.
• Net profit up 29.7 percent at Rs 123.5 crore.
• Ebitda up 18.2 percent at Rs 237.1 crore .
• Margin at 33.2 percent versus 25.2 percent.
• Raw material as percent of sales at 40.8 percent.
• Bottomline improved due to the fall in raw material prices.

Praj Industries (Q1, YoY)

• Revenue up 10.4 percent at Rs 211.6 crore.
• Net profit up 2.5 times at Rs 8.8 crore.
• Ebitda up 52.4 percent at Rs 6.4 crore.
• Margin at 3 percent versus 2.2 percent.

Crisil (Q2 CY19, YoY)

• Revenue down 4.7 percent at Rs 415.8 crore.
• Net profit down 13.5 percent at Rs 66.7 crore.
• Ebitda down 10.6 percent at Rs 96.6 crore.
• Margin at 23.2 percent versus 24.8 percent.

Schaeffler (Q2 CY19, YoY)

• Revenue up 1.5 percent at Rs 1,116.7 crore.
• Net profit down 25.9 percent at Rs 82.5 crore.
• Ebitda down 11.6 percent at Rs 159.3 crore.
• Margin at 14.3 percent versus 16.4 percent.
• Other income down 57 percent.

Mahindra EPC Irrigation (Q1, YoY)

• Revenue up 2.1 percent at Rs 53.6 crore.
• Net profit up 46.7 percent at Rs 2.2 crore.
• Ebitda up 31.3 percent at Rs 4.2 crore.
• Margin at 7.8 percent versus 6.1 percent.

Nifty Earnings To Watch

• Bharti Infratel
• Asian Paints

Other Earnings To Watch

• Oberoi Realty
• Crompton Greaves Consumer Electricals
• V-Guard Industries
• Jubilant FoodWorks
• ICICI Prudential Life Insurance Company
• IDFC First Bank
• Intellect Design Arena
• Canara Bank
• Cheviot
• Cigniti Technologies
• Karur Vysya Bank
• Kewal Kiran Clothing
• KSB
• Liberty Shoes
• Maharashtra Scooters
• NELCO
• Newgen Software Technologies
• PI Industries
• Quess Corp
• Rane (Madras)
• Sagar Cements
• Security and Intelligence Services (India)
• Shriram Transport Finance Company
• Syndicate Bank
• Syngene International
• Tejas Networks
• Tube Investments of India
• GE T&D India
• Monsanto
• Reliance Nippon Life Asset Management
• Sharda Cropchem

Indian ADRs

Stocks To Watch

• HDFC stated that as a policy in case of under-construction properties, it will disburse loans to individuals based on the stage of construction. The company’s exposure to housing loan products in subvention schemes offered by developers is less 2 percent of the individual loans.
• Vedanta: A South African court ordered Zambia to halt plans to liquidate and sell copper mines controlled by Indian billionaire Anil Agarwal pending arbitration. The ruling is a blow to the Zambian government, which has said it plans to sell KCM to another foreign investor, Bloomberg reported
• Bharti Airtel: India’s Department of Telecommunications seeks to challenge the merger of Tata Teleservices unit with Bharti Airtel in the Supreme Court in August, Bloomberg reported.
• Reliance Infra and Reliance Capital excluded from F&O Segment. No contracts shall be available for these companies with effect from Sept. 27
• Cox & Kings clarified that licenses issued by IATA remains valid till termination and the company is procuring airline tickets from trusted alternate travel companies on cash and carry basis. IATA had suspended the company’s license for selling air tickets on June 28.
• TV Today Network: NCLT approved amalgamation of Mail Today Newspapers and India Today Online with the company.
• Hotel Leelaventure: SEBI stated that company’s proposed asset sale does not qualify as ‘related party transaction’ except for its plan to the transfer ‘Jamavar’ trademark to Brookfield. (Bloomberg News)
• Kolte Patil Developers clarified that it has neither raised nor invested in any India real estate fund set up based out of Mauritius.
• Bosch to suspend all manufacturing operations at company’s plant at Naganathpura in Karnataka between July 27 and July 29, to adjust for shrinking demand and avoid inventory buildup.
• SEBI gives wholly owned subsidiary Multi Commodity Exchange Clearing Corporation Ltd nod to act as clearing corporation for a period of one-year with effect from July 31.
• Hindustan Construction Company’s board approved lenders resolution plan which includes prepayment of certain long term existing facilities, re-arrangement of working capital facilities availed by the company and settlement of certain guarantee and put options obligations.
• Dynamatic Technology successfully delivered the 5000th shipset of Single Aisle Flap-Track-Beam Assembly for Single Aisle Aircraft (A318, 431 9, 4320 & A321) Family to Airbus. The company is the global single source supplier of FlapTrack-Beam Assemblies. This is the first instance that a functional aero-structure of a major commercial jet is being manufactured by an Indian company.
• Future Lifestyle: Board to meet on July 26 to consider fund raising by way of equity shares.
• Bajaj Electricals: ICRA downgraded company’s credit rating by one notch due to increasing leverage level and the subsequent weakening of debt coverage metrics. The long-term line of credit and NCDs rating downgraded to A from A+. Short-term line of credit and commercial paper rating downgraded to A1 from A1+.

Offerings

• Affle India to announce price-band, offer period for its IPO.

Bulk Deals

• Garden Reach Shipbuilders: UTI AMC sold 6 lakh shares or 0.52 percent equity at Rs 131.99 each.

Trading Tweaks

• GTPL Hathway to move out of short term ASM Framework.

Who’s Meeting Whom

• Rallis India to meet HDFC Standard Life Insurance on July 25.
• VST Tillers Tractors to meet Pinebridge Investments on July 24.

Money Market Update

• The rupee on Tuesday strengthened to 68.84/$ from 68.92/$ on Monday.

F&O Cues

Futures

• Nifty July futures closed at 11,333.8, premium of 3 points.
• Nifty futures open interest across series up 9 percent, adds 17.9 lakh shares in open interest.
• Bank Nifty July futures closed at 29,194.7, premium of 66 points versus 104 points.
• Bank Nifty futures open interest across series up 8 percent, adds 1.3 lakh shares in open interest.
• Nifty Rollover at 44 percent, Nifty Bank Rollover at 42 percent.

Options

• Nifty PCR at 1.05 versus 1.00 (across all series).

Nifty Monthly Expiry 25-July

• Max open interest on call side at 11,500 (36 lakh shares)
• Max open interest on put side at 11,300 (39.6 lakh shares)
• Max open interest addition seen in 11,350C (+6.9 lakh shares), 11,400C (+5.2 lakh shares)

Stocks In F&O Ban

In Ban:

• Dish TV
• IDBI Bank

Out Of Ban:

• DHFL Bank
• Reliance Infrastructure

Brokerage Radar

Morgan Stanley on M&M Financial

• Maintained ‘Overweight’ with a price target of Rs 545.
• Bad loans rose sharply as expected given seasonality and strong recovery in March quarter.
• Higher provisions cause big miss on net profit.
• Pre-provisioning operating profit missed estimates due to higher cost.
• See meaningful downside risk to EPS estimates and will reassess post conference call.

Morgan Stanley on SBI Life

• Maintained ‘Overweight’ with a price target of Rs 850.
• Strong growth with higher margins drive growth in value of new business premiums.
• Key operating metrics continued to show strong improvement.

Jefferies on Kajaria

• Maintained ‘Buy’; cut price target to Rs 720 from Rs 730.
• Robust volume growth of 10 percent, amidst weak offtake.
• Management cut its 2019-20 volume outlook to 12-13 percent versus 15 percent, with margin at 15-16 percent.
• Tightening industry compliance, strong product mix & distribution, place KJC in a sweet spot.

On L&T

CLSA

• Maintained ‘Buy’ with a price target of Rs 1,730.
• Order inflows surprise in tough macro.
• Capital goods business shine but subsidiaries slow.
• Building the book for a pick-up and the infra margins is a story for the second half.

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 1,700.
• Meets our relatively high expectations; lower infra segment margins take away a bit of sheen.
• Performance driven by EPC business for a change.
• Stay Outperform on domestic pick-up, steady overseas, strong cash flows and valuation.

BofA Securities

• Maintained ‘Neutral’; cut price target to Rs 1,624 from Rs 1,719.
• June quarter was broadly inline; strong order inflows a positive surprise.
• Order mix improves as domestic orders drive growth.
• Infra margins continued to disappoint.

On Hindustan Unilever

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 2,041.
• June quarter numbers were ahead of estimates on higher margins
• Biggest surprise has been margin levers which are not exhausted yet.
• Not immune to slowdown, but current ecosystem suitable for market share gains.

Morgan Stanley

• Maintained ‘Equal-weight’ with a price target of Rs 1,630.
• Earnings in-line; margin expansion ahead of estimates.
• Management expects near term demand to remain subdued, with likely pick-up in the second half.
• Growth over the next few quarters must be viewed in context of high base.

Credit Suisse

• Maintained ‘Neutral’; hiked price target to Rs 1,880 from Rs 1,850.
• Growth slowdown gets deeper, cut in ad spends drives margins.
• Strong Ebitda margin expansion will get tougher going ahead.
• Management hopes of pick-up in the second half has many risks.

On Zee Entertainment

CLSA

• Maintained ‘Buy’ with a price target of Rs 515
• Subscription revenues drove the earnings beat; ad growth slumps.
• Promoter stake sale days away; key catalyst for the stock.
• Content cost increasing and Zee5 ramping-up.

Credit Suisse

• Maintained ‘Neutral’; hiked price target to Rs 400 from Rs 390.
• Subscription growth drives beat which also helped offset the slowdown in advertising.
• Conversion of FTA channels to pay, impacted reach and hence advertising.
• Zee5—ramp up slower than expected, though early days yet.